Hybrids are flying off the lots in Japan, with Toyota’s Prius leading the charts for the 12th month in a row. Before, that spot was taken by another hybrid, the Honda Insight. In the Battle of the Hybrids, Honda introduces a fighter that hits below the belt, at the wallet: Honda will launch a hybrid in Japan that will cost around $17,000 in today’s dollars, “making it the most affordable hybrid in Japan,” The Nikkei [sub] says. The Nikkei sees a hybrid price war erupting in Japan.

The so far unnamed Honda hybrid will be based on their Fit, and will share core components with the Insight. It will be priced around $4,500 below Honda’s Insight, and only around $2,200 above the gas-powered Fit.

Toyota’s Prius goes for around $23,000 in Japan. According to the Nikkei, Toyota is “planning to release a new hybrid next year for a comparable price but equipped with better batteries,” and “competition between Japan’s two leading automakers looks likely to intensify.”

Swapping the mechanicals over to the Fit shouldn’t be difficult, since it’s the platform donor for the Insight, and has all that space in the back for batteries (since the fuel tank is under the driver). The problem is, the industry has already shown that people buying hybrids want their car to look… hybrid-y.

Still, good news. May mean that hybrids are coming that people other than Japanese or American buyers can afford.

When Honda came out with the Insight, every salesperson to lot porter wondered why they didn’t just make the Fit a hybrid. The Civic type of hybrid wouldn’t cut it and it didn’t. So now they’ve decided that the guys washing the cars at the dealerships are smarter than they are. Hey guys grab the hose.